Federal prosecutors said they do not expect to file criminal charges related to their multi-year investigation into the District’s Options Public Charter School, whose former managers have been accused of using the school to enrich themselves with millions of tax dollars meant for at-risk and disabled students.
The U.S. Attorney’s Office disclosed that it has shut down the criminal investigation in a document that has been filed in a parallel civil case city officials are pursuing. That civil case is pending in D.C. Superior Court.
Federal officials had been investigating the schools’ former leaders since at least 2013, and had convened a grand jury to hear evidence in the case.
But Ronald E. Machen — the U.S. Attorney who began the investigation — stepped down last year. He was replaced by Channing D. Phillips, whose office decided not to bring charges after conducting a “thorough review” of the probe, according to the court filing.
Phillips also declined to bring charges last year against former Mayor Vincent C. Gray, who had been the subject of a years-long investigation into the financing of his 2010 campaign.
Asked why prosecutors decided not to pursue criminal charges in the Options case, spokesman William Miller provided a statement: “After reviewing the results of an extensive investigation, the U.S. Attorney’s Office concluded that it could not proceed with criminal charges.”
In the civil case against Options — which was filed in 2013 but was put on pause during the criminal investigation — the D.C. attorney general’s office alleges that three former leaders of the charter school and a staff member at the D.C. Public Charter School Board concocted an elaborate scheme to divert $3 million in tax dollars to themselves and two for-profit companies they founded.
Investigators also have looked into whether school officials committed Medicaid fraud by exaggerating the needs of disabled students and paying students with gift cards to ride school buses.
City officials are seeking to recover about $1.5 million from the individual defendants. The defendants have long maintained their innocence, but the lawsuit led to their immediate removal from Options, which went into court receivership. The school now has new leadership and a new name, Kingsman Academy Public Charter School.
The two for-profit companies also went into court receivership. In December, the companies paid $200,000, 71 percent of which went to Options, according to court records. The remaining 29 percent went to lawyers who represented the companies.
Paul Dalton, one of the former Options managers, said defendants would tell their side of the story in a court filing soon. He said The Washington Post has published the government’s version of events “as gospel,” but he declined to comment further.
Troy Poole, a lawyer for former D.C. Public Charter School Board official Jeremy Williams, said his client is pleased that he is no longer under criminal investigation. “However, I believe the U.S. Attorney’s Office could have made this decision much earlier than now,” Poole said. Lawyers for other defendants did not respond to requests for comment.
Also initially named as a defendant in the civil suit was the chairwoman of the school’s board, J.C. Hayward, a longtime television news anchor at WUSA. The station placed Hayward on leave when the lawsuit was filed in October 2013, and she never returned to the air, retiring in January 2015.
Months later, Hayward was dismissed from the civil case. Her lawyer, Jeffrey S. Jacobovitz, has said that she did nothing wrong and was not aware of any alleged scheme.
“It is unfortunate that J.C. had to go through this lengthy process,” Jacobovitz said. “It had a significant impact on her life, but the government ultimately reached the right resolution.”
Hayward said Monday that she is relieved that the legal ordeal is over.
“I’m feeling good because I have my name and my character cleared,” Hayward said. “I never ever stole a dime from Options, nor did I knowingly allow somebody else to steal money. … The allegations were misconstrued. They were absolute lies and they changed a lot of people’s lives.”
The allegations against the former Options managers, as well as similar allegations of self-dealing at another D.C. charter school, prompted city officials to question the oversight of charter schools’ finances.
In June, the D.C. Council voted unanimously in favor of a measure to strengthen the oversight capabilities of the D.C. Public Charter School Board. The new law gives the board the right to inspect records from certain private companies that manage charter schools.
The measure is not as far-reaching as some transparency advocates hoped it would be — it does not, for example, make charter schools subject to the public records and open meetings laws that govern public agencies — but the D.C. Public Charter School Board said it would be an important tool to prevent the abuse of taxpayer dollars.